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Senators To Examine Exclusive Handset Deals
narramissic writes "Based on a request that a group of rural operators sent asking the FCC to examine the practice of handset exclusivity, four members of the Commerce Subcommittee on Communications, Technology and the Internet sent a letter to the FCC expressing their concern. Small operators, like U.S. Cellular argue (PDF) that 'exclusive handset contracts divide wireless customers into haves and have nots.' But nationwide operators, including Verizon, maintain (PDF) that 'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.' The Commerce Committee expects to hold a hearing on the issue tomorrow."
'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.'
I wasn't aware that the carriers were in the business of manufacturing...
Um... yeah.. carriers would never disable features on cellphones, now would they?
It seems to me that in the absence of exclusivity agreements the carriers would have greater incentive to introduce new features because they wouldn't be allowed to dictate terms to handset manufacturers in order to maintain their current level of mediocre offerings.
"Give a man fire, and he'll be warm for a day; set a man on fire, and he'll be warm for the rest of his life
The Senators in question are probably trolling for campaign contributions.
Name one innovative handset developed by carriers such as Sprint, AT&T, et all.
Nokia, RIM, Apple and (previously) Motorola have developed all the 'innovative handsets'.
What'd sprint give us?
Rebranded, OEM, disposable turds
On a technical level American carriers care only that the phones pass GCF. If they want to bring innovation into this, they are going to have to argue that somehow the business model itself is innovative, but I don't think that is what they are saying.
What is important in exclusivity is that users don't have a choice of carriers if they want to buy a specific phone. If you want the iPhone, you're stuck with AT&T, for example. But that doesn't bring any innovation to the phones themselves.
Unlocking the phones isn't any better, though, technologically speaking. With a choice of carriers, you end up with a lot of choice, but the phones on the market are still the same old dreck. The reason for this is because the innovation must happen at the phone maker level. To support this, operating system vendors need to also be innovative. And to make sure that innovative operating systems can run, advanced chips are necessary.
But none of that involves the carriers. Carriers are merely the pipes: A necessary component, but a wholly replaceable part. From a technical innovation standpoint, these guys are the road system. Cars are what we consider innovative, roads are only considered when they suck. And frankly, American cellular carriers suck.
"Without longer than a century copyright, I would have no incentive to develop anything useful." "Without being able to patent walking using both feet, I wouldn't have incentive to make anything useful." "Without being able to grant myself a monopoly on something, I would have no incentive to create anything useful." "Without the Shoot Anyone Using Anything But My Stuff Act, I would have no incentive to develop anything useful."
I am getting quite tired of seeing that, and we should really quit listening. If you don't want to, then by all means, don't, and feel free to fade away. In the meantime, those who still have plenty of incentive to do so (by finding creative ways to make money off of it, out of simply enjoying it, out of their own need for a tool to do something or a wish to create something for their own enjoyment, what have you), will do so.
I'm getting less and less tolerant of this temper tantrum. And that's really all it is-"I don't WANNA share!!!!! I thought of it FIRST!!!!" If the dinosaurs mean it, then by all means, their time has come and we should let them go. Good riddance to them, something better suited to modern times will take their place. On the other hand, they do tend to like paying themselves those large bonuses, so I would wager they'll start getting really creative in the absence of these artificial restrictions enabling them to be lazy and rest on their laurels.
To fight the war on terror, stop being afraid.
Since when does Verizon or any other carrier have anything to do with the development of a phone? They just take whatever you can get from HTC/Motorola/Samsung, throw a logo on it, change the name to something stupid, and pick 5 random features to cripple for no apparent reason. As for promotion, while I guess that charging customers 200% more for the phone than it's actually worth unless they sign a 2 year contract (if you let them but it unlocked at all) is technically "promotion", I don't think that is really in the spirit of the true definition.
What a bunch of tools.
.. someone stood up to this nonsensical practice. For nearly 20 years we've had GSM openness in Europe and this sort of exclusive nonsense is making its way across the water in the form of the iPhone. For a while I have been thinking this is an attempt by the mobile phone operators to usher in a new wave of proprietary phones.
Heavy integration with online services, firmware branding and exclusive deals are nothing but bad news for us. I havn't bought a SIM-locked phone since 2001 and I hope to never have to buy one again. The openness of GSM is a great thing but people take it for granted here.
A lot of people buy locked phones because they are cheaper, but they shouldn't be cheaper. This was acceptable 10 years ago when not everybody had a phone but now there are too many phones. Producing more phones only generates more e-waste. There should be more countries like Belgium around where this shit with subsidising phones doesn't fly. At least then my collection of unlocked Nokias will be worth more than 20 cents
Exclusive handset deals are nothing more than a way of making people put up with a more expensive / lower quality network they wouldn't normally put up with.
You're not. If your home or work is in a listed low coverage area, they'll let you out of your contract with no ETF, no arguments - all I got was a "We hope you'll consider us again when we've got better coverage in your area" (and I happily would... the -only- problem I have ever had with Tmo was coverage.
That's not at all what they're complaining about. They're complaining about the fact that they couldn't make iPhones and other sought after phones available to their customers. Basically they're stepping in for the consumer in this instance, which is common for smaller competitors to do, to try and get a piece of the action. Which is necessary for a competitive market. Not that an individual phone which is paid for largely or entirely by subsidy be allowed to break the contract with no consequence. Just allow for any company that wishes to offer the subsidy the opportunity to do so.
In other words, exclusivity deals breed ripoffs. Yeah, that's one form of competition, but it doesn't really seem like "innovation" to me when the release of one product that everyone wants causes every manufacturer to try to make an exact copy with a different exclusivity deal. If everyone carried the iPhone, these companies would be trying to differentiate themselves by coming up with the next big thing, not making copies of the last big thing.
I'm not from this industry, but I don't believe wireless providers develop handsets. Handset manufacturers (e.g. LG, Samsung, Motorola, etc.) do.
10 Bits= $.25
100 Bits= $.50
110 Bits= $.75
1000 Bits= 1 byte
IIRC they give you 30 days from your contract start date to change your mind.
Xfce: Lighter than some, heavier than others. Just right.
It should be deals (including the way spectrum auctions are carried out and regulated) that result in carriers *cough*Verizon*cough* getting a monopoly (or near monopoly) in certain areas just because they are the only carrier with coverage. (like the deals various carriers have made to get exclusives in subway systems, high-rises and other places where extra equipment is needed to give sufficient coverage)
There is competition amongst the operators to develop the best handsets.. Without the iphone, would we have seen the Storm, Omnia or others?
Each device has it's good and bad points. The fact is that Cellular companies are only in charge of part of their network at best, and the and the handset shouldn't really be the determining factor of choosing an Provider At&T readily admits their network wasn't optimal for the number of users with the Iphone and they are now trying to remedy that so each user has a better experience. Only time will give a better indication
Exclusive handsets aren't necessarily a bad thing. It is just one factor that should be measured..
There really isn't enough spectrum to have true competition. The cost of the RF spectrum and cell site acquisition are the major factors for an operator.
The suddenoutbreakofcommonsense is very interesting, but I'm not sure which way:
1. The handset sweetheart deals are creating haves and have nots and should stop.
2. Without the handset manufacturers having to bend over backwards to please the carriers, there might have been fewer, lower-cost, higher-quality handsets available.
When the handset makers can tell the carriers to take it or leave it, and when those handsets have features dictated by the consumers instead of the carriers (abysmal here in the US), and market competition irrespective of long-term contracts hits the handset pricing, then not only would that tag truly apply, but so would whatabreathoffreshairfinally.
Pathological kinda promises Path + Logical - but instead, you get stuck with pathetic.
It's especially bad when you consider that the GPS signal is not even provided by the carrier.. It's not like your costing them money by using it. They want you to think that by using their custom GPS software with a monthly fee you are using GPS signals sent by them.. (although AGPS is a signal from them I suppose) .. In reality their navigation services should only be a one time charge for the software.. Worse ripoff than text message charges !
waiting for ad.doubleclick.net
US Cellular appears to be a CDMA network from my spot-checks, so they couldn't use a stock IPhone on their network if they wanted.
That's part of the battle right now - even US GSM phones from T-Mobile vs ATT aren't 3G-compatible, nor compatible with CDMA networks (Verizon, Sprint, US Cellular).
Doug
Then what do Motorola, LG, Samsung, RIM, Apple, Palm, Sony/Ericcson, Nokia, and all the other companies who aren't carriers but whose logos still appear on the handsets/batteries/chargers, contribute to the cell phone market?
But nationwide operators, including Verizon, maintain (PDF) that 'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.'
Why are wireless carriers involved in the development and promotion of innovative handsets? Isn't the free market supposed to motivate handset developers to develop and promote innovative handsets?
Or do the wireless carriers not believe in the free market? I, for one, think the free market is a pretty good thing. You know, when it genuinely lets the purse-holder freely decide.
Aren't these the same corporations who cry "free market" every time the government tries to regulate them?
Perhaps, and I don't want to sound like a conspiracy theorist here, but just maybe; the wireless carriers actually are not objective supporters of the free market? Maybe what they want is not the free market, but laissez-faire capitalism. But then must we not ask, without a free market, how can laissez faire capitalism seek efficiency?
Stop-Prism.org: Opt Out of Surveillance
wireless carriers would have less incentive to develop and promote innovative handsets
I'll buy "promote" but when was the last time a wireless carrier ever "developed" a handset? And no, I don't count taking a good handset someone else made and crippling all of its features with a shitty firmware overwrite that turns the phone to crap.
If I have been able to see further than others, it is because I bought a pair of binoculars.
It made a great deal of sense to select one or two devices, get them to agree to an exclusive contract, which would include us paying to promote their devices, and get the product to market. I don't see this situation being any different. It helped both us as a network provider, and them as a device provider. I don't see this as a conspiracy to restrict trade, just common business sense.
And, on an unrelated note, could anyone tell me why the HTML "li" code now works erratically? Is there another code that just gives me a simple new paragraph?
What was once true, is no longer so
Why on earth would any reasonable person expect a letter to the FCC to accomplish anything? I've tried to contact the FCC before and they just respond with the same canned response every time, telling me they cannot do anything. Might as well send a letter to Santa.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
if you aren't creating a list.
It seems, when given the option, that most big business will try to strangle the hand that feeds them. Cheap and reliable communication has been a keystone of American business, both domestic and foreign and here we are trying to catch up because business is too damn greedy/short-sighted for their own good. Their argument has nothing to do with innovation. It has everything to do with making money by not rolling out a more expansive, more reliable network. Who suffers? America does and it's not like they can just pick up their network and plop it down somewhere else.
Instead of debating it in Senate (which exists solely for debates), why put it to Commerce Committee and why now?
The answer can b e got here. It says a former tech exec has joi ned the committee.
Which means he is trying to pre-empt any legislation by the Congress by putting it for consideration in the committee.
Which effectively kills any legislation and also protects the interests of telecoms.
Sneaky, disgusting and probably illegal.
But then the senate has a record of disgust. So nothing new here.
"Doing what i can, with what i have." ~ Burt Gummer
Maybe the cellular carrier in Canada could have used some of its profits from charging some of the highest prices in the western world [article is a bit dated, but still accurate] for wireless services to hire adequate engineering resources to help their networks function with new technology and allow interoperability. Instead of investing in resources to improve network speed and capacity, they abuse monopoly power to amass profits and engage in rent-seeking behaviour. I'm not blaming you personally, of course. But saying that a wireless company with significant government-granted monopoly power, grants, and tax cuts is locking in devices because making things work is too hard is a little disingenuous.
And, on an unrelated note, could anyone tell me why the HTML "li" code now works erratically? Is there another code that just gives me a simple new paragraph?
On a similarly unrelated note, can anyone tell me why throwing candles lit by matches at my Stouffer's frozen meal isn't warming it up? Is there a proper industry standard for doing something simple that I have completely missed out on?
But you underestimate the challenges we faced after introduction (this was about 20 years ago). The collective genius of marketing predicted the number of subscribers as "X"; when it turned out to be "3X", every other division of the company was scrambling. There weren't enough people in customer service to handle all the complaints, so we got a reputation for lousy service. There weren't enough cell sites so the engineers were working 60 hours to provision and tune them. The billing system was from Cincinnati Bell, and they didn't give us source code. I was the technical liason from Marketing to these other departments. When the upper crust of Marketing decided we needed to add a new billing plan, they would send me down with the admonition "They'll try to give you some excuse about not having source code; it's just their way of stalling". So even though we were getting lots of customers, our costs with all the overtime, rush fees, etc., were very high. We had to rebate a lot of calls because they dropped part way through. And the sales people were allowed to give out "non revenue" lines to clients (read "friends"); when they finally audited that, they were astonished to find that we had given out over 20,000 non-rev lines in Ontario alone - that was about 1 in 8, IIRC. In that environment, trying to adapt to new equipment was, shall we say, problematic. I recall one occasion when I was trying to find the status of the integration of voice mail/paging system, the engineer in charge saw me in the switch room and literally ran away.
Still, it was a tremendous education in how not to run a business. I left after 18 months much wiser.
What was once true, is no longer so
But nationwide operators, including Verizon, maintain (PDF) that 'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.'
You've got to hand it to Verizon for trying to confuse the congressmen with idiot logic. Are wireless carriers really developing innovative handsets? (or handsets at all)
I am trying to think of more than 3 revolutionary handset lines besides the iPhones, the Blackberries and Nokias. I guess we can throw in Motorola for their early efforts and Sony Ericsson for cute design too. But where are the carriers?
I think Verizon is really pissing their pants because they are thinking "in the absence of exclusivity agreements, wireless carriers will have a harder time locking down good phones with carrier-specific crappy software."
In theory, non-exclusive phones would also reduce the number of overall phones brought to market and increase the quality since the developers would be competing against a larger market.
Really, with non-exclusive handsets, both consumers and cell phone companies win. Large carriers will be the only ones losing... they will have to choose between market share, profit, and handset control. Of course, who are we kidding, nothing is going to change because they probably own half of the senate.
So Apple can't choose which market to develop for? For example if they decided not to make a CDMA phone, would you rather the government force them to?
I think locking a phone out of contract should be illegal. But locking a phone to a carrier while in contract is fine with me. They are subsidizing my phone, so they should have rights to keep me using it on their service only until I "pay it off".
Don't get me wrong, I'd love to have an G1 with AT&T. But I think it's the phone manufactures right to make exclusive agreements with carriers as long as I can take the phone to any network compatible provider after my contract has been for-filled.
I do think the line "wireless carriers would have less incentive to develop and promote innovative handsets" is a bunch of bullshit though. I can't see AT&T putting a huge budget into developing phones. I would suspect LG, apple, etc are using their own R&D money then recouping it with exclusive contracts.
There are other ways to compete besides phones. You could stop charing for text messaging, stop the per minute billing, start providing features that all US carriers are currently hating on (tethering?). Hell you could of jumped on the open source bandwagon and backed something like open moko.
It seems to me they don't want to compete, they want to bitch and make the competition less competitive.
And, on an unrelated note, could anyone tell me why the HTML "li" code now works erratically? Is there another code that just gives me a simple new paragraph?
"BR""BR" (replace "'s with angle brackets)
As for your statement about when data was added to the wireless networks. I can understand that happening in the beginning. In the beginning there were no data standards. There were just a bunch of different companies with different handsets which sent data all in different ways. But, now there are these things called standards. Like GSM, GPRS, HSDPA, CDMA, 2G, 3G, EDGE, 3.5G, 1xRTT, and EV-DO. And many phones support multiple standards or can be configured to support a specific standard. All that should matter now is what standard your cellular network supports and that is it. ANY phone that happens to support that standard should be allowed to be used. It doesn't matter if you are AT&T, Verizon, or Joe's Fancy Wireless... If they all happen to use 3G, then any phone that supports 3G should be allowed to be purchased and used on that carrier, because they are just that, a carrier. They are selling access to a network service. They are not and should not be the gatekeepers of what device is allowed on that network as long as it follows the communications standard (just like the internet providers, and cable TV networks, they can not say that only Comcast Cable users can purchase the 70" Sony XRB8 OLED LCD TV, and if you want to use that TV to watch DirectTV satellite, well FU).
The cellular companies are a carrier and service provider who provides a wireless access for phone and data. They should be held to the same requirements as other providers of services in which the hardware that connects to the service is freely usable by anyone on any provider that has a network which supports the same standards that the hardware supports.
We were all warned a long time ago that MS products sucked, remember the Magic 8 Ball said, "Outlook not so good"
"It seems to me they don't want to compete, they want to bitch and make the competition less competitive."
Thank you for reminding me of the single biggest flaw in capitalistic competition theory... given the choice, no capitalist would ever compete, and given actual circumstances that happens more often than we might like to think.
Try not to take me more seriously than I take myself.
They shouldn't be locking your phone whilst on contract. Since you are on contract, you are still paying them back through your monthly fees regardless of which carrier you are using your phone on.
Only time they need to lock a phone is when its subsidized but not on a contract (e.g. discounted prepaid phones).
The whole cell phone market and carriers is overall pretty twisted and generally nasty. I kept myself willfully ignorant of most of it until recently. (I was happy in my ignorance too...sigh.) But my old Palm IIIc was not going to live forever so I thought it was time to finally update my knowledge on ultra-mobile computing.
What I found out right away was that what I really wanted was a Nokia n810 but that it was not going to be a phone. Nor was it going to be online unless I was tethered or on Wifi. Not a huge deal given that those were the only real major downsides. And to make a long story short I did finally end up with a n810 which I love. My biggest complaint is that it is a little big & heavy but overall I'm very pleased.
But at a point the new n810's were out of stock everywhere. I looked around for a used one but it was slow going so I thought I should look at a smartphone option vs my old setup, dumbphone & PDA. Both setups have their pros and cons and at some point I might go smartphone & tablet (I guess calling the Nokia devices PDAs felt passe.) but I digress.
Finally getting to my point here when I looked at the options with smartphones I got pretty annoyed pretty quick. The fact that they mask the price of the devices with rebates and contract requirements is not good. The fact that not only are not all of the devices available on all the carriers but that each carrier can have their own set of rules on how the devices will function is annoying. Nevermind that even if you do have a device that can be used by multiple carriers most if not all of them won't turn it on unless it has their tag on it.
None the less I eventually found a smartphone that I thought I could live with and set about trying to negotiate upgrading my old phone to that with my carrier. I felt like I had walked into the sleezyest of used car dealerships with 'Mark' written on my forehead in glowing ink. The idea that I did not want to upgrade to a plan that was 2 to 3 times what I was currently paying for the privilege of using this phone resulted in political levels of feigned outrage.
In fact when I would be asked about what I was looking for and outline my needs the idea that I don't spend half my day texting seemed downright shocking to these reps. The fact that what I really wanted was a block on all texting on my account had them looking for wooden stakes. For kicks I went to an AT&T rep at one point and worked in the term 'jailbreaking' as often as I could into our conversation. To his credit he did what he could to sell me but developed an unhealthy tick in his left eye.
To me the whole cell carrier/phone business needs a lot of work because from top to bottom it's a mess right now. Hopefully that a light is being shown on some of their nonsense will clean some of it up.
Really, I know what I'm doing...Ohhhh, look at the shiny buttons!
If the carrier doesn't market the phone then the manufacture will
There is no point manufacturing something and marketing it (both *hugely* expensive operations) if the carriers are not going to provide it to customers, and customers can't switch to competing carriers who will.
US handsets are in general a year or two behind the handsets available in the rest of the world largely because of this. The US mobile comms market is a nice little walled garden for favoured (by the carriers) manufacturers. Take a look at the handsets which Verizon actually provides vs what the *same* manufacturer provides to the rest of the world.
Nokia (largest phone manufacturer in the world) for example:
Verizon:
Nokia 7205 (silver keypad)
Nokia 7205 (pink keypad) just LOOK at that innovation...
Nokia 6205
Nokia 2605 Mirage
All (wow, a whole, 3 of them) of these are ancient.
And take a look at the handsets available from Nokia:
http://shop.nokia.co.uk/nokia-uk/searchresults.aspx?page=1&culture=en-GB&search_id=47&chka=0&chkp=1&pagesize=9999&sortorder=desc
124 produced and available (in the UK) vs 3 from a carrier.
The rest of the world, the carriers want the latest phones and network services because if they don't provide it, someone else will. The US, far less incentive, you take what you're given. I like the spin that monopoly promotes innovation though.
I doubt it would hurt the manufacture at all.
Not the manufacturer. You are the one getting the bad deal.
Deleted
I'm guessing that the GP is on a 2 year contract. A lot can happen in two years. What if you change your job, house, city or whatever? You can't know that in the first month. Not even 6 months. I'm not even certain what will happen in the next 7 days.
Trolls are like broken clocks. They show the truth two times a day. The rest of the day they talk nonsense.
I did work a few years ago for an unnamed handset maker
That must've saved a lot on letterhead and business cards.
In my opinion, a far bigger problem than handset exlcusivity deals, is the practice of charging customers the same price for cell phone service whether or not they are or are not getting a contract for a phone. Most of the carriers will let you buy phones outright, and even pay month-to-month for service. The problem is, I'm paying the same monthly-fee as if I were on the contract. So, it ends up being financially stupid to buy a phone outright, because you're just paying an extra $200-$300 (in most cases), but not paying less for service than the people whose phones are subsidized by the contracts.
If I'm not getting my phone subsidized, I should be seeing about a $10/mo discount on my service. But, no.
Get rid of that nonsense, and also give people the legal right to modify their phones to unlock them from the original network, and you've solved the 'exclusivity' problem in the simplest possible fashion.
Which is why all cars should come with a clutch pedal - after all, the driver controls shouldn't care what the hell runs underneath them, including whether the transmission is manual or automatic.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes